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MoviePass Worked Out Great

Matt Levine, writing for Bloomberg: Is there a Harvard Business School case study of MoviePass yet? I feel like there are a lot of lessons to be learned from the MoviePass story, but maybe that’s wrong. Maybe all of the lessons are just “if you do the opposite of normal business things, it will work, but only for a while.” Maybe business school students should actively avoid learning that lesson. Anyway Jason Guerrasio has a big story on the rise and fall of MoviePass at Business Insider today. The basics of the story — MoviePass was a business that charged people $9.95 a month to see unlimited movies in theaters, and then paid the theaters full price for the tickets, losing money on each transaction and eventually falling into a huge and comical financial hole — were familiar to me, and probably to you, and it’s not like we didn’t already know it was weird. But I learned a lot from this article about how weird it was.

For instance, under founder Stacy Spikes, MoviePass charged $50 a month for its service, but couldn’t get enough subscribers to break even. Then it was acquired by Helios & Matheson Analytics, whose chief executive officer, Ted Farnsworth, came up with the idea of charging much less: “Why Farnsworth settled on $10 is unclear. Several people told me he wanted a price that would grab headlines. … But in July 2017, the MoviePass board agreed to the deal. And on August 15, the price drop went into effect. Thanks to word-of-mouth buzz and press attention, within two days subscriptions jumped from about 20,000 to 100,000. MoviePass had transformed from a scrappy startup trying to keep the lights on to a disrupter in the making.”

What an amazing sentence. It went from being “a scrappy startup trying to keep the lights on” (bad) to a buzzy “disrupter in the making” (good) by giving up on trying to keep the lights on. The trick is not to make enough money to cover your costs; it’s to stop trying. Losing a lot of money is better than losing a little money; it has more panache, attracts more attention, certainly gives you that attractive hockey-stick user growth. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Annual income twenty pounds, annual expenditure three hundred million pounds, result unicorn.


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